After a turbulent week, Wall Street rallied on Friday, buoyed by a decrease in U.S. Treasury yields and positive economic data that outweighed concerns about the Federal Reserve’s restrictive policy potentially remaining in place until later in the year. The data showed that there was a steady demand for services and purchasing managers’ indices indicated that activity in the sector continued to expand despite cooling input prices.

All three major U.S. stock indices experienced significant gains, with the Nasdaq, particularly benefiting from interest rate-sensitive mega caps, surging close to 2%. The Fed’s comments regarding inflation and interest rates helped to ease fears and contributed to the fall in U.S. Treasury yields. For the week, the indexes recorded gains, with the S&P breaking its three-week losing streak, and the Dow returning to positive territory year-to-date and experiencing its first weekly advance since late January. Additionally, the S&P 500 surpassed its 50 and 200-day moving averages, two closely watched technical levels.

The 10-year Treasury yield fell below the significant 4% level after reaching its highest level since 2010. This decline in yields occurred even as the data suggested that the U.S. economy remained resilient enough to withstand further rate hikes and could return to growth in services activity for the first time in eight months. The strong economic data has prompted investors to reconsider the amount of tightening required by the Fed to slow the economy materially. Stifel notes that the markets predict that the Fed may raise rates to a terminal rate as high as 5.46%, well above last year’s end level of 4.95%.

European shares experienced an uptick on Friday, with a 0.9% increase in the continent-wide STOXX 600, led by the rate-sensitive tech sector’s rise of 1.8%. Investor hopes that the U.S. Federal Reserve would adopt a cautious approach to rate hikes aided the positive sentiment, alongside the anticipation of the release of the final reading of Eurozone services activity data. The upcoming policy meetings of both the Fed and the European Central Bank (ECB), U.S. jobs data, and China’s annual parliament session on Sunday, where Beijing will set its economic goals for the year, are being watched closely.

The positive sentiment in Europe was also boosted by the overnight gains in Asia, following data that revealed China’s services sector’s activity expanded at the fastest pace in six months in February, signaling a robust recovery in this crucial export market for European companies. Moreover, the positive close of Wall Street on Thursday contributed to the optimistic sentiment, as investors welcomed comments by Atlanta Federal Reserve President Raphael Bostic, who advocated for a “slow and steady” approach to be taken by the Fed, proposing a hike of 25 basis points later this month.

In Europe, markets have priced in a 50 basis point hike by the European Central Bank in two weeks, with President Christine Lagarde mentioning on Thursday that additional interest-rate increases may be necessary to combat inflation, which is still at a very high level.

The week started on a rough note for crude prices, but the market picked up pace after positive factory data from China, which is the largest importer of oil. Nonetheless, the market could not break out as hawkish rate hike discussions and inflation concerns persisted, even after the Energy Information Administration reported on Wednesday that U.S. crude exports had hit an all-time high of 5.629 million barrels the previous week. The session on Friday was also volatile, with prices initially falling after a report by the Journal indicated a potential exit of the UAE from OPEC. However, the market regained its footing by midmorning, after Reuters released a report contradicting the Journal’s story. WTI settled at $79.68 while Brent closed at $85.83.

In contrast, the most active Natural Gas for April contract experienced an increase, settling at $3.009 mmBtu, up 24.4 cents on Friday and 55.8 cents for the week. It was the first time since January that a front-month contract on the Henry Hub settled above the $3 level, following gas futures’ loss of the $2 perch due to an unseasonably warm winter. The rebound in gas prices is linked to the forecasted late winter chills across the United States, which has less than three weeks left until the official beginning of spring.